Forex traders enjoy the advantage of trading with higher leverage and lower margin requirements compared to equity market traders. However, before diving into the dynamic realm of forex, it's important to understand which currency pairs are most frequently traded.
Here’s an overview of 5 of the most popular currency pairs in forex:
The most actively traded currency pair is the EUR/USD, reflecting the significant global influence of both the European single market and the United States. According to the latest BIS survey, it accounted for 22.7% of the total market share, a slight decrease from the 24% recorded in the 2019 survey. The high daily trading volume and liquidity of this pair result in narrow spreads for traders.
The EUR/USD typically shows a negative correlation with the USD/CHF (U.S. dollar/Swiss franc) pair and a positive correlation with the GBP/USD (British pound/U.S. dollar) pair. This pattern arises from the positive correlations among the euro, the British pound, and the Swiss franc.
The USD/JPY is the next most actively traded currency pair, holding a market share of 13.5%, a slight increase from its previous 13.2%. This pair has traditionally been responsive to political dynamics between the United States and the Far East.
The USD/JPY generally shows a positive correlation with the USD/CHF and USD/CAD currency pairs, largely because the U.S. dollar is the base currency in all three pairs. Additionally, the USD/JPY is influenced by changes in interest rates set by the Bank of Japan and their impact on the yen relative to the U.S. dollar.
The GBP/USD currency pair accounted for 9.5% of the forex market share, marking a slight decrease from the previous 2019 survey. Its popularity and trading volume reflect the economic strength of both the British and U.S. economies.
The GBP/USD generally exhibits a negative correlation with the USD/CHF (U.S. dollar/Swiss franc) pair and a positive correlation with the EUR/USD (euro/U.S. dollar) pair. This pattern results from the positive correlations among the British pound sterling, the Swiss franc, and the euro.
The USD/CNH (also referred to as USD/CNY) is the trading ticker symbol for the pair involving the U.S. dollar and the Chinese Renminbi. The Renminbi is the official currency of the People's Republic of China, while each unit is known as the Yuan. This currency pair is classified as "exotic" or volatile because it combines a major currency, the USD, with the currency of an emerging market, the CNH.
The USD/CAD is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Canadian dollar of Canada (symbol $ code CAD).
The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one US dollar. For example, when the USD/CAD is trading at 1.3500, it means 1 US dollar is equivalent to 1.35 Canadian dollars. The US dollar (USD) is the world’s most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency.
1. You can either open a live account to start trading immediately or practice with virtual funds using our demo account. Click here to open an account.
2. Select your preferred currency pair from our list of the most traded options or opt for a more exotic pair. Stay informed with our news and analysis section, which offers insights and forecasts on future forex market movements.
3. Be mindful that the forex market can be volatile, and trading with leverage significantly increases the risk of losses. We recommend reviewing our risk management guidelines and familiarizing yourself with stop-loss strategies to enhance your trading approach.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.
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